Taughannock Falls

Thursday, September 30, 2010

I've been talking to voters in recent days, trying to bring them out to vote for David Cicilline on November 2. I'm very encouraged at how clearly most folks reject the Republican chorus of misinformation that floods the airwaves. Yet these same voters still (rightly) demand a positive reason to vote for Democrats beyond distrust of Republicans. Many expressed hope that David Cicilline won't run away from the obligation to continue working for the people once he gets to Washington. They like his support for campaign finance reform. Here in Rhode Island people are fed up with the poor performance of both the business and political establishments. What will work here should work everywhere in the U.S. Candidates shouldn't make unrealistic promises or sugarcoat the realities we face. Given the choice between a reasonable, honest agenda and pie-in-the-sky most voters have enough common sense to choose the former. Candidates shouldn't waste their time trying to appease bigots and fools, let them rant on Fox News while the sane majority votes in a responsible manner. Voters don't expect to agree with their political representatives on every issue. What they do expect (and deserve) is that these representatives operate in a transparent, principled, and logically consistent fashion to promote the public good.

Tuesday, September 28, 2010

Senate Republicans on Tuesday blocked a Democratic plan to encourage companies to bring jobs back from overseas, as a united GOP caucus voted against a motion to debate the measure on the Senate floor.

The motion failed 53 to 45.

The legislation would have raised taxes on corporations that shift operations overseas, costing U.S. jobs. It also would have awarded companies that bring jobs back from abroad by offering a two-year hiatus from payroll taxes for those positions.

I wish I could say with confidence that the Democrats will run with this in a big way. The vast majority of voters, as opposed to big corporate donors, will resent the Republican vote against allowing this measure to come to the floor. Sadly, I suspect that too many Democratic candidates will allow fear of offending their corporate masters to keep them from jumping on this issue. The GOP will only pitch so many softballs over the middle of the plate. It's time to hit the easy home run, or just go home.

Monday, September 27, 2010

In this piece Paul Krugman takes down an argument that is sometimes put forward by those who cling to an idealized conception of how the labor market works. In my own experience I've encountered this argument quite often in academic circles. The reason that the unemployed can't find jobs is that they don't possess the right training or education. A professor at Harvard takes comfort in knowing that the skills she's imparted to her students have helped them find good jobs. This same professor might overlook the fact that nearly all of her students come from very wealthy and influential families who open doors for their children. Those few students who come from more humble backgrounds get four years to make connections with elite friends who can help them out. The skills they learn are valuable, but their connections are important too. Or do we want to think that George W. Bush was the most "skillful" student to come out of Yale? Most American workers have no problems in learning to use new technologies, what they can't do is work as cheaply as someone in Bangladesh who can also be trained to do the same job. They also can't force a business without enough customers to require their services.

What can be done about mass unemployment? All the wise heads agree: there are no quick or easy answers. There is work to be done, but workers aren’t ready to do it — they’re in the wrong places, or they have the wrong skills. Our problems are “structural,” and will take many years to solve.

But don’t bother asking for evidence that justifies this bleak view. There isn’t any. On the contrary, all the facts suggest that high unemployment in America is the result of inadequate demand — full stop. Saying that there are no easy answers sounds wise, but it’s actually foolish: our unemployment crisis could be cured very quickly if we had the intellectual clarity and political will to act.

In other words, structural unemployment is a fake problem, which mainly serves as an excuse for not pursuing real solutions.

Who are these wise heads I’m talking about? The most widely quoted figure is Narayana Kocherlakota, the president of the Federal Reserve Bank of Minneapolis, who has attracted a lot of attention by insisting that dealing with high unemployment isn’t a Fed responsibility: “Firms have jobs, but can’t find appropriate workers. The workers want to work, but can’t find appropriate jobs,” he asserts, concluding that “It is hard to see how the Fed can do much to cure this problem.”

Now, the Minneapolis Fed is known for its conservative outlook, and claims that unemployment is mainly structural do tend to come from the right of the political spectrum. But some people on the other side of the aisle say similar things. For example, former President Bill Clinton recently told an interviewer that unemployment remained high because “people don’t have the job skills for the jobs that are open.”

Well, I’d respectfully suggest that Mr. Clinton talk to researchers at the Roosevelt Institute and the Economic Policy Institute, both of which have recently released important reports completely debunking claims of a surge in structural unemployment.

After all, what should we be seeing if statements like those of Mr. Kocherlakota or Mr. Clinton were true? The answer is, there should be significant labor shortages somewhere in America — major industries that are trying to expand but are having trouble hiring, major classes of workers who find their skills in great demand, major parts of the country with low unemployment even as the rest of the nation suffers.

None of these things exist. Job openings have plunged in every major sector, while the number of workers forced into part-time employment in almost all industries has soared. Unemployment has surged in every major occupational category. Only three states, with a combined population not much larger than that of Brooklyn, have unemployment rates below 5 percent.

Oh, and where are these firms that “can’t find appropriate workers”? The National Federation of Independent Business has been surveying small businesses for many years, asking them to name their most important problem; the percentage citing problems with labor quality is now at an all-time low, reflecting the reality that these days even highly skilled workers are desperate for employment.

So all the evidence contradicts the claim that we’re mainly suffering from structural unemployment. Why, then, has this claim become so popular?

Part of the answer is that this is what always happens during periods of high unemployment — in part because pundits and analysts believe that declaring the problem deeply rooted, with no easy answers, makes them sound serious.

I’ve been looking at what self-proclaimed experts were saying about unemployment during the Great Depression; it was almost identical to what Very Serious People are saying now. Unemployment cannot be brought down rapidly, declared one 1935 analysis, because the work force is “unadaptable and untrained. It cannot respond to the opportunities which industry may offer.” A few years later, a large defense buildup finally provided a fiscal stimulus adequate to the economy’s needs — and suddenly industry was eager to employ those “unadaptable and untrained” workers.

But now, as then, powerful forces are ideologically opposed to the whole idea of government action on a sufficient scale to jump-start the economy. And that, fundamentally, is why claims that we face huge structural problems have been proliferating: they offer a reason to do nothing about the mass unemployment that is crippling our economy and our society.

So what you need to know is that there is no evidence whatsoever to back these claims. We aren’t suffering from a shortage of needed skills; we’re suffering from a lack of policy resolve. As I said, structural unemployment isn’t a real problem, it’s an excuse — a reason not to act on America’s problems at a time when action is desperately needed.

I encourage anyone who liked the above piece to follow the link to the Roosevelt Institute Study. The study provides much well-organized evidence to support Krugman's argument.

Sunday, September 26, 2010

Republicans have put out their new "Pledge to America" as an attempt to counter the (justified) public perception that they are merely obstructionists, without a positive agenda. The document has a lot of stirring rhetoric, but not so much in the way of specific proposals. The Pledge is mostly a repetition of what Republicans like George W.Bush promised back in 2000. Cut taxes on the wealthy, let big insurance and oil companies have what they want, and spend less money on the poor. The inconsistency now is the same as it was then: without massive government borrowing there is no way to give all this money away to the wealthy. Even were you to completely eliminate food stamps, federal aid to education, and the VA program you couldn't do it. Just like with Bush, the likely consequence of a transfer of power to Republicans is to shift from tax and spend to borrow and spend. The debt will grow, because "cutting spending" on the social safety net, while continuing to spend merrily on defense and giveaways to the wealthy and powerful, has been tried before. When George W.Bush did it he took us from a surplus to huge deficits in a short time. Republicans have done Democrats a favor by making clear how they want to go back to their old, discredited ways. Hopefully Democratic members of Congress and the Senate will take advantage of this chance to warn the voters.

Thursday, September 23, 2010

I had the chance today to chat for a few minutes with a man I've met a few times over the years. He works as a janitor, and his wife was laid off a few months ago from her job as a bank teller. We got to talking about politics, and he said something I'll never forget. "I'd like to think that at least one party still cared about us working people. It ain't like that though, both of 'em knock themselves out doing favors for the rich guys. Main difference seems to be that the Republicans don't even pretend to care about us any more."

Here's the problem for the Democrats. They still have some benefit from not being Republicans. Yet they don't generate much enthusiasm, and many ordinary Americans are beginning to wonder if they might not be Republicans in disguise. Running from confrontations with Republicans will only heighten this skepticism. Today's apparent decision by Senate Democrats, to delay voting on letting the Bush tax cuts expire for the wealthiest Americans, may have disastrous consequences. Losing a few big-money donors might be tough. Losing control over the House and Senate will be much tougher. President Obama seems to have done his part in setting up a positive atmosphere for this vote. If his Senate colleagues drop this ball they'll only have themselves to blame.

Wednesday, September 22, 2010

Bernie Sanders is no obstructionist. Bernie Sanders has fought hard to help President Obama get things done in the Senate. Yet now the man proposed by President Obama for confirmation as OMB director has been rejected by the Senator from Vermont. Not because he feels that Jack Lew couldn't be confirmed. No, the problem with Jack Lew is simple: he is a fox being asked to guard the hen-house. Here's Sen. Sanders' statement:

"Jack Lew has a long and distinguished career in public service and is clearly hard working and intelligent. Reluctantly, I will not vote to confirm Mr. Lew to be director of the Office of Management and Budget.

"As a result of the policies of President George W. Bush, the middle class in this country is collapsing, the gap between the very rich and everyone else is growing wider and we are continuing to hemorrhage good-paying manufacturing jobs overseas.

"Last week I applauded President Obama for appointing Elizabeth Warren to be the architect of the new Consumer Financial Protection Bureau. Professor Warren has a long track record of standing up for the middle class against the greed, recklessness and illegal behavior on Wall Street. We need more voices like Elizabeth Warren's sending a clear message that the rules have changed and that the middle class in this country has a strong advocate.

"Jack Lew was kind enough to meet with me last week in my office and to answer my questions at a Senate Budget Committee hearing. Frankly, I found too many echoes of the failed policies of the past in his responses to my questions on trade policy, Social Security, deregulation of banks and other issues.

"It is my strong belief that President Obama needs an OMB Director who is willing to stand up to corporate America and the wealthy, say enough is enough, and fight for policies that protect the working class in this country. Unfortunately, I do not believe Mr. Lew is the right man at this time for this important job."

I applaud the principled stand of our northern neighbor. We will not accomplish much in the way of true reform if we allow defenders of the status-quo to become the administrators of the new rules. Jack Lew is too wedded to big-money interests to look out for the American middle-class. We shouldn't be so concerned with getting Republican confirmation votes that we dare not risk offending our corporate masters. This administration will not get a lot of help from them anyways. Better to serve the people who voted for change, than to curry favor with those who are determined to block change.

Tuesday, September 21, 2010

Well the 2010 November elections are inching closer. Many of the folks I respect most out here in the blogosphere have waxed eloquent about their disappointment in the Democrats' performance in Washington. This is certainly understandable. Yet part of this frustration merely reflects just how deep a hole has been dug for our country. We have enormous amounts of work to do simply repairing recent damage. There may be certain Democrats who are so bad, that watching them lose to a Republican might not be such a bad thing. But even a gutless Democrat, who votes right only 80% of the time, is far superior than a Republican who will never vote in the nation's best interest. We need to work hard to prevent another Republican hijacking of Congress. I'm old enough to remember what it was like in the 90's-- we don't want to find out how much worse it would be this time around. So, please grab a bumper sticker, make some calls, help turn out more voters. Let's close this enthusiasm gap and save America. Christine O'Donnell and her friends provide great entertainment on the campaign trail-- it won't seem so amusing if they spew their nonsense on the floor of the Senate!

The sad reality is you don't find a lot of influential folks in Washington D.C. who aren't driven by tremendous egotism, desire for wealth, or lust for power. Elizabeth Warren strikes me as a person with genuine altruistic impulses. She is prepared to work hard on behalf of American consumers, contributing her expertise without demanding a lot in return. More power to her!

Monday, September 20, 2010

There's a good reason that Paul Krugman is one of my favorite economists-- without resorting to vulgar, or mean-spirited, attacks on individuals he is able to point out the selfishness of those who resent being asked to share a little more of their bounty:

These are terrible times for many people in this country. Poverty, especially acute poverty, has soared in the economic slump; millions of people have lost their homes. Young people can’t find jobs; laid-off 50-somethings fear that they’ll never work again.

Yet if you want to find real political rage — the kind of rage that makes people compare President Obama to Hitler, or accuse him of treason — you won’t find it among these suffering Americans. You’ll find it instead among the very privileged, people who don’t have to worry about losing their jobs, their homes, or their health insurance, but who are outraged, outraged, at the thought of paying modestly higher taxes.

The rage of the rich has been building ever since Mr. Obama took office. At first, however, it was largely confined to Wall Street. Thus when New York magazine published an article titled “The Wail of the 1%” it was talking about financial wheeler-dealers whose firms had been bailed out with taxpayer funds, but were furious at suggestions that the price of these bailouts should include temporary limits on bonuses. When the billionaire Stephen Schwarzman compared an Obama proposal to the Nazi invasion of Poland, the proposal in question would have closed a tax loophole that specifically benefits fund managers like him.

Now, however, as decision time looms for the fate of the Bush tax cuts — will top tax rates go back to Clinton-era levels? — the rage of the rich has broadened, and also in some ways changed its character.

For one thing, craziness has gone mainstream. It’s one thing when a billionaire rants at a dinner event. It’s another when Forbes magazine runs a cover story alleging that the president of the United States is deliberately trying to bring America down as part of his Kenyan, “anticolonialist” agenda, that “the U.S. is being ruled according to the dreams of a Luo tribesman of the 1950s.” When it comes to defending the interests of the rich, it seems, the normal rules of civilized (and rational) discourse no longer apply.

At the same time, self-pity among the privileged has become acceptable, even fashionable.

Tax-cut advocates used to pretend that they were mainly concerned about helping typical American families. Even tax breaks for the rich were justified in terms of trickle-down economics, the claim that lower taxes at the top would make the economy stronger for everyone.

These days, however, tax-cutters are hardly even trying to make the trickle-down case. Yes, Republicans are pushing the line that raising taxes at the top would hurt small businesses, but their hearts don’t really seem in it. Instead, it has become common to hear vehement denials that people making $400,000 or $500,000 a year are rich. I mean, look at the expenses of people in that income class — the property taxes they have to pay on their expensive houses, the cost of sending their kids to elite private schools, and so on. Why, they can barely make ends meet.

And among the undeniably rich, a belligerent sense of entitlement has taken hold: it’s their money, and they have the right to keep it. “Taxes are what we pay for civilized society,” said Oliver Wendell Holmes — but that was a long time ago.

The spectacle of high-income Americans, the world’s luckiest people, wallowing in self-pity and self-righteousness would be funny, except for one thing: they may well get their way. Never mind the $700 billion price tag for extending the high-end tax breaks: virtually all Republicans and some Democrats are rushing to the aid of the oppressed affluent.

You see, the rich are different from you and me: they have more influence. It’s partly a matter of campaign contributions, but it’s also a matter of social pressure, since politicians spend a lot of time hanging out with the wealthy. So when the rich face the prospect of paying an extra 3 or 4 percent of their income in taxes, politicians feel their pain — feel it much more acutely, it’s clear, than they feel the pain of families who are losing their jobs, their houses, and their hopes.

And when the tax fight is over, one way or another, you can be sure that the people currently defending the incomes of the elite will go back to demanding cuts in Social Security and aid to the unemployed. America must make hard choices, they’ll say; we all have to be willing to make sacrifices.

But when they say “we,” they mean “you.” Sacrifice is for the little people.

I would guess that Paul Krugman is deliberately invoking the memory of tax-cheat Leona Helmsley's famous boast: "taxes are for little people." I humbly recommend dredging up the hotel queen's arrogant behavior as a good cultural memory to use in advancing our cause. Unlike Martha Stewart, Helmsley garnered no public sympathy whatever when her crimes were exposed. Parents can explain to their kids who she was.

Saturday, September 18, 2010

The primary success of Christine O'Donnell notwithstanding, the Tea Party movement may not be doing as well as the media seems to think. A national convention in Las Vegas was already cancelled due to lack of interest this summer. It was rescheduled for the Mirage hotel in Las Vegas, October 14-16. The movement's national website (www.teapartynation.com) encourages interested parties to visit www.nationalteapartyconvention.com for the latest details. Visiting the website, one doesn't find anything other than a server error message. The Mirage Hotel confirms they are not now planning to host any sort of convention there in October. Maybe they'll try again next year? This second fiasco suggests that there may be truth in the claim that the whole "Tea Party Movement" is more astroturf than grassroots. Would the "movement" even exist at all without the generous backing of the billionaire Koch brothers and their cronies? I submit that many of the Tea Partiers harbor real anti-establishment rage for various reasons. Powerful big-money interests have succeeded in channeling this anger against "Obamacare" and other "big-government" initiatives. Yet the fact that the promised presence of Sarah Palin, and other Tea Party favorites, wasn't enough to make the convention happen suggests the depth of commitment among many Tea Partiers isn't very great.

Friday, September 17, 2010

The other day I went to the laundromat. I remembered my hangers and detergent, but somehow forgot to bring my book. Thus I found myself actually watching Fox News on the T.V. While I've seen countless outrageous clips on various lefty and moderate websites, I never truly believed it could be as hyper-partisan as people claimed. Well, it turns out they're right. The entire time my clothes were washing and drying the Fox "News" Channel engaged in unabashed Republican cheerleading. The only two exceptions to this rule were: 1) a brief non-political story about rebuilding a flood-damaged Nashville hotel, and 2) an interview with a "Blue Dog" Democrat who explained why she must vote with the Republicans on extending the Bush Tax cuts, for Americans earning over $250,000/year. When you consider the substance of the Arizona "Democrat"'s comments, and the emphasis on the "strong Christian values" that sustained the Nashville hotel folks in their time of trouble, it would be accurate to say that this sample of the Fox "News" broadcast day was all Republican, all the time. I now am convinced that those of my fellow bloggers who routinely watch and report on this propaganda machine, every day, are truly heroic. Another half-hour of that drivel might have been enough to send me clear around the bend! And I didn't even have to deal with Glenn Beck...

Thursday, September 16, 2010

This article, written by a professor from the University of Minnesota, is really useful in its clarity and simple logic:

John M. Bryson: My experience with British health care

It worked very well on a personal level, and is effective overall. So why the suspicion here at home?

The emotional debates over health care reform in the United States last fall and again this election season are puzzling to my wife and me. We are professors who were on sabbatical leave in London from August 2009 through August 2010, so we missed last year's debates. While in the United Kingdom we were automatically covered by the National Health Service.

For us, the NHS worked quite well. One example: The week we arrived in London we went to the NHS Choices website (www.nhs.uk), punched in our postal code and immediately got a listing of local clinics. We chose the closest one, stopped by and filled out two short forms, let the reception staff make copies of our passports and visas, and that was it: We were covered. None of this business about needing coverage by an employer's plan, no concerns about preexisting conditions (we both have them), no rationing by what we could afford, and no excessive paperwork. All that mattered was that we were in the UK. We had a right to be taken care of by the NHS.

Another example: I badly sprained my back one evening. The next morning I was in severe pain and couldn't get out of bed. I called the clinic, and within two minutes a doctor was on the phone. He asked if I could come in immediately, but I was in too much pain. He offered to make a house call if I could wait for a few hours. I wondered if he might do something over the phone, so he ran me through a series of questions and little exercises to make sure he understood what was wrong. He then wrote prescriptions for painkillers and a muscle relaxant. My wife picked them up, filled them at a local pharmacy (at no cost because I am over 60) and was home within the hour. I was up and walking a few hours later and was fully better in a few weeks. How many times has anyone in the United States spoken to a doctor within two minutes of calling and had the same doctor offer to make a house call?

The British have a mostly socialized health care system, meaning they handle both finance and production through the government. In the United States, we mostly socialize risk through health care insurance paid for by employer, employee, consumer and government contributions, but we also socialize much health care financing; some estimate that government pays for about 50 percent of all health care costs. We leave production mostly to businesses and nonprofits, but there is also a lot of government provision through public hospitals and clinics. The Veterans Affairs health care system is as close as we get to the NHS.

What do the British get for their money? Using 2009 figures, they spend 9 percent of GDP on health care; we spend more than 17 percent. They spend $3,150 per capita on health care each year ($2,600 of which is public money); we spend $7,500 per capita ($3,500 of which is public money). They cover everyone (even visitors from abroad); we have a long way to go. They have an average life expectancy at birth of 79.4 years; here, the average is 78.2. Their infant mortality rate is 4.8 per 1,000 live births; here, it is 6.4. Is their system perfect? No, clearly not. For example, there are issues about timely access to specialized elective care, but they also do not ration that care based on ability to pay, which we do.

Having experienced the NHS and U.S. health care systems, I think it is safe to say that no one would design our system if they could start from scratch. Ours is 50 percent more expensive than almost any other nation's, has left way too many people out and produces many population level outcomes far worse than they should be. In addition, our system places a huge burden on company balance sheets, making it far harder for companies to compete in world markets where other nations pay for health care through taxes. I am not a health care policy analyst, but it doesn't take one to see that we are clearly not getting what we should for what we pay. Just consider what is politically unimaginable: If we had the British system, we would have at least 8 percent of our GDP of $14.5 trillion left over -- or about $1.15 trillion each year -- that we could use to fix every problem with the system and still have money left to give back to employers, employees and taxpayers -- and we also would have better population-level outcomes. The switch to the NHS is not going to happen, but the thought experiment does help one see the merits of moving to a system that a least guarantees health care insurance to all, that moves away from reliance on employer contributions, and that produces better overall outcomes at less cost.

Here's a simple proposal for Americans of goodwill who have lived abroad. You too can share your story-- without writing anything as extensive as this article of Professor Bryson. A short letter to the editor of your local paper can help increase public support (already fairly high) for the public option, as a step towards single-payer health care in the U.S.

Wednesday, September 15, 2010

Well our hard work paid off in David Cicilline's primary election victory yesterday. Yet, even though he is now the designated Democratic heir to Patrick Kennedy's seat in Rhode Island's first Congressional district, he still must face a Republican opponent with limitless money. Having been in politics for a while, Mayor Cicilline will be vulnerable to "anti-establishment" attacks. That these attacks are funded by billionaires won't be noticed by everyone. Nonetheless, I have great confidence that David Cicilline will prevail, and I look forward to seeing him do good things in Congress. I should also acknowledge the valiant efforts of the David Segal campaign in this race. Segal is a true progressive, who will certainly gain higher office eventually, if he continues to work hard in Rhode Island's State House. Hopefully his supporters (and those of Anthony Gemma and Bill Lynch) will see the importance of rallying behind David Cicilline in November!

Tuesday, September 14, 2010

Here's a story that really makes me smile. Mostly for the workers, but also because I can now pick up some applesauce at the supermarket!

Striking Workers Declare Victory at Mott’s

by James Parks, Sep. 14, 2010

More than three months after walking out, the 300-plus workers at Mott’s upstate New York applesauce plant declared victory after ratifying a new contract yesterday. The workers will return to work on Monday, Sept. 20, on what would have been the 121st day of the strike.

The members of Retail, Wholesale and Department Store Union/UFCW) (RWDSU/UFCW) Local 220 walked out on May 23 after earlier rejecting a concessions-laden contract from Mott’s, a subsidiary of the Dr. Pepper Snapple Group food and drink conglomerate, which made a $550 million profit last year.

The new contract restores wage levels and continues the defined-benefit pension plan. The workers’ contract at the Williamson, N.Y., plant expired April 16 and even as Dr. Pepper Snapple Group CEO Larry Young pocketed $6.5 million last year, the company demanded a $1.50 per hour wage cut for all workers, a pension freeze for current employees and the elimination of a pension for future employees, decreased employer contributions to the company’s 401(k) retirement plan and increased employee contributions toward health care premiums and co-pays.

The striking workers received strong support from union leaders and elected officials, including AFL-CIO President Richard Trumka, New York State AFL-CIO President Denis Hughes, presidents of numerous other unions, the entire New York State Democratic congressional delegation, elected officials in New York, members of the Canadian Parliament and several global unions and union federations. Union and progressive activists filled the Mott’s Facebook page comments about the corporation’s greed, and so many people posted "There's Something Rotten at Mott's" icons the company closed off public posting of images to its Facebook page.

Says RWDSU President Stuart Applebaum:

Not a day went by without people stopping by to drop off a financial or food donation for the strike fund. The international, national and local community supported us thoroughly, and the RWDSU and Local 220 members want to share their thanks. The RWDSU members at Mott’s have a message for working people everywhere: Stand up for what you believe in, and stay united.

This story should be receiving big-time media attention. I fear it will be relegated to the back pages. I do feel that the pressure we put on them-- with our letters, Facebook postings, boycott, etc.-- helped the workers' cause.

The extremism of O'Donnell would be laughable if there wasn't a chance she could actually wind up wielding power in the Senate. We can only hope that she won't be able to win the general election if she becomes the Republican nominee.

Saturday, September 11, 2010

Well today I was out trying to drum up support for the Mayor of Providence, David Cicilline, who faces a democratic primary election Tuesday. He is running to become the Democratic nominee to represent the first congressional district of Rhode Island, open now thanks to the retirement of Patrick Kennedy. I met a lot of nice folks, including one middle-aged woman who asked me a simple question: "How come elections are on Tuesday? I mean it's hard to go vote in the middle of the week." I wasn't able to give her a very good answer, though I cheered her up by letting her know the polls were open fairly late. The whole rest of the day the question nagged at me. Were U.S. elections on Tuesday back in the days of Washington and Adams? Was there any debate over the matter? Have there been attempts to make election day a public holiday?

When our system of national elections was first organized, very few people argued in favor of direct universal suffrage. Law-abiding white male citizens with sufficient property were the only people deemed worthy of the vote. Even this group was considered dangerously broad, and so checks on the popular vote were built into the system. Senators, for example, were to be selected by state legislatures, not directly elected by the voting public. The Electoral College was established to ensure that more responsible men could intervene if an irrational voting public chose an unsuitable man for President. Only the elections for the House, held every two years, were meant to reflect the direct choice of all the voters in each district.

So how did we come to settle on the first Tuesday after the first Monday in November as Election Day? The original practice allowed for significant variations between the states. The firm date was the date for the state's electors (the Electoral College) to meet: the first Wednesday in December. States were allowed to hold their elections at any time they chose in the 34 day period prior to that first Wednesday in December. It wasn't until 1845 that the U.S. Congress decided to establish a national election day. At that time, while a new industrial sector was beginning to emerge in New England and the mid-Atlantic, the voting public was still overwhelmingly involved in farming. Early November was after the harvest, but before the first big winter snows. Tuesday was chosen so as not to interfere with the Sabbath or market day, which in most towns and villages was held on Wednesday. This date had been adopted already in New York State, and now became the national norm. A handful of states-- Delaware, Hawaii, Kentucky, Montana, New Jersey, New York, Ohio, and West Virginia-- have made election day a civic holiday, in most of the U.S. it is still a regular work day.

I think that progressive politicians in other states could benefit from making an election day holiday a campaign issue. People love holidays, and the opponents of such a move would be forced to admit that they favor lower voter turnout, or just don't like holidays for American workers, who enjoy far less paid time off than their counterparts in the rest of the developed world.

Friday, September 10, 2010

At today's press conference, President Obama was asked about the planned Koran burning in Florida and the controversial Cordoba House project in Manhattan:

PRESIDENT OBAMA: Well, on the second -- on your second question, there's no doubt that when someone goes out of their way to be provocative in ways that we know can inflame the passions of over a billion Muslims around the world, at a time when we've got our troops in a lot of Muslim countries, that's a problem. And it has made life a lot more difficult for our men and women in uniform, who already have a very difficult job.

With respect to the mosque in New York, you know, I think I've been pretty clear on my position here. And that is, is that this country stands for the proposition that all men and women are created equal, that they have certain inalienable rights; one of those inalienable rights is to practice their religion freely. And what that means is that if you could build a church on a site, you could build a synagogue on a site, if you could build a Hindu temple on a site, then you should be able to build a mosque on the site.

Now, I recognize the extraordinary sensitivities around 9/11. You know, I -- I've met with families of 9/11 victims in the past. You know, I can only imagine the -- the continuing pain and anguish and sense of loss that they may go through. And tomorrow, we as Americans are going to be joining them in prayer and remembrance.

But I go back to what I said earlier: We are not at war against Islam. We are at war against terrorist organizations that have distorted Islam or falsely used the banner of Islam to engage in their destructive acts. And we've got to be clear about that. We've got to be clear about that because, if we're going to deal with the problems that Ed Henry was talking about, if we're going to successfully reduce the terror threat, then we need all the allies we can get. The -- the -- the -- the folks who are most interested in a war between the United States or the West and Islam are al Qaeda. That's what they've been banking on.

And fortunately, the overwhelming majority of Muslims around the world are peace-loving, are interested in the same things that you and I are interested in: how do I make sure I can get a good job, how can I make sure that my kids get a decent education, how can I make sure I'm safe, how can I improve my lot in life. And so they have rejected this violent ideology for the most part, overwhelmingly.

And so from a national security interest, we want to be clear about who the enemy is here. It's a handful, a tiny minority of people who are engaging in horrific acts -- and have killed Muslims more than anybody else.

The other reason it's important for us to remember that is because we've got millions of Muslim-Americans, our fellow citizens, in this country. They're going to school with our kids. They're our neighbors. They're our friends. They're our coworkers. And, you know, when we start acting as if their religion is somehow offensive, what are we saying to them?

I've got Muslims who are fighting in Afghanistan, in the uniform of the United States armed services. They're out there putting their lives on the line for us. And we've got to make sure that we are crystal clear for our sakes and their sakes: They are Americans. And we honor their service. And part of honoring their service is making sure that they understand that we don't differentiate between "them" and "us." It's just "us." And -- and -- and that is -- is a principle that I think is -- is -- is going to be very important for us to -- to sustain. And I think tomorrow is an excellent time for us to -- to reflect on that.

It really all boils down to three of President Obama's words: "It's just us." The U.S. has managed to be more welcoming than many other nations. Yet we must constantly struggle against those who would define others as not "true" Americans. All law-abiding citizens are true Americans who deserve the rights granted to them. In the course of disagreement people will naturally say mean and nasty things. This is to be expected in any open society. However, when a whole group of Americans are told they should not feel free to exercise their rights, then the ideals on which our open society is based are compromised.

Thursday, September 9, 2010

I have seen many people express bewilderment about how so many ordinary Americans can be persuaded to vote against their own economic and social interests. Part of the answer can be found in the endless mass-media attempts to distract and divide with wedge issues. Part of it is an unfortunate, knee-jerk anti-intellectualism that rejects a more truthful and complex story in favor of a simplistic narrative. Yet, in contrast to their counterparts in Europe, many Americans cling to the delusion that America is a "classless society." While we do not recognize titles of nobility to be sure, the myth that we are a land of equal opportunity flies in the face of reality. Poor Americans may on occasion escape their status, but the Horatio Alger rags-to-riches scenario is pretty rare. A poor youth, whether an African-American in Detroit, or a white in rural Kentucky, stands a fairly good chance of becoming a poor adult. This is not because of "poor life choices" as many moralizing economists and sociologists sometimes claim. Rather, it is because of poor life opportunities. Working hard in school will guarantee a diploma, but not money for college. For someone who's really poor, paying $45 to take the SAT may seem an unjustifiable expense. Upon entering the workforce, poor folks must jump through hurdles they find particularly difficult. Even if they impress management with their hard work, they are unlikely to possess the kind of polish that will make management feel comfortable in promoting them too high. Racial and gender discrimination are of course still widespread, but so is class discrimination. The son of a wealthy attorney is simply given many more chances than the son of a forklift-driver. We all see this, yet we try to deny it with more Horatio Alger tales. Professional athletes and entertainers who hit the big-time are a rebuke to those left behind in their old neighborhoods. Drive, ambition and talent are all it takes, so what's wrong with you? 80% of Americans, who can't afford the carefree suburban lifestyle portrayed as normal on T.V., are made to feel like "losers." So these "losers" identify with the wealthy "winners" and accept their "wise" counsel on tax policy. The fact that a billionaire like Ross Perot could run as the people's champion, and actually get some votes, shows how stubbornly Americans want to believe that the very wealthy really aren't so different from the rest of us. That's why attacking the super-wealthy for incompetence, greed, and heartlessness is far more effective than merely denouncing the enormity of their fortunes. Praising philanthropy and conscious efforts to provide good jobs helps to emphasize the extremely sociopathic behavior of the greedheads.

Wednesday, September 8, 2010

Robert Mackey and Damen Cave give us this update on the planned Gainesville Koran-burning extravaganza:

Terry Jones, the pastor of a tiny Florida church that has garnered worldwide attention for its plan to burn more than 200 copies of the Koran, told reporters on Wednesday that, “as of this time, we have no intention of canceling.” He added, “we are not convinced that backing down is the right thing, so on Sept. 11 we will continue with our planned event.”

As The Lede explained earlier today, there has been widespread opposition to the church’s plans from American officials, including the American commander in Afghanistan, Gen. David Petraeus, who warned, “It could endanger troops and it could endanger the overall effort in Afghanistan. … It is precisely the kind of action the Taliban uses and could cause significant problems. Not just here, but everywhere in the world we are engaged with the Islamic community.”

Speaking to television crews assembled on the church’s lawn in Gainesville, Fla., Mr. Jones said, “we understand the general’s concerns and we are still considering” what he said. The pastor, who has been highly successful at using the media to spread his message, then attacked the news media for what he said was a failure to accurately report what he called “quite a bit of support” for the book-burning event, even within the American military.

By way of example, Mr. Jones cited a phone call he said he had received on Tuesday from a former American solider who claimed that “the people that are on the field, the Special Forces … are 100 percent behind us.”

Perhaps the most disturbing aspect of this whole situation is how little self-criticism has been provoked within the media. None of the blowhards (at Fox and elsewhere), who have been cheer-leading the increasingly dangerous anti-Muslim hysteria in recent months, show any remorse. They act as if this Terry Jones had no reason to expect that his demonstration of intolerance and ignorance would find any support. Indeed, some of the most shameless anti-Islamic fear-mongers are now making a point of publicly asking pastor Jones to refrain from his planned Koran-burning. Even Pamela Geller, who lobbied hard against the Cordoba House long before her opposition was taken up by well-known pundits and politicians, tried to assume a posture of moderation. We'll have to wait and see how this whole sorry episode plays out.

Tuesday, September 7, 2010

Los Angeles provides a good illustration of how unions strengthen worker purchasing power and the economy. According to a December 2007 study by the Economic Roundtable, union workers in LA County earn 27 percent more than nonunion workers performing the same jobs. The higher wages for the LA union workers -- who number about 800,000 or 15 percent of the workforce -- add $7.2 billion a year in earnings. And there is a multiplier effect. As these workers purchased housing, food, clothing, child care, and other items, their consumption power created an additional 307,200 jobs, or 64,800 more than would have been produced without the higher union wages. The union wages also yield about $7 billion in taxes to various levels of government. If unionization rates were higher, these positive ripple effects would increase across the economy.

According to the Economic Policy Institute, union workers earn 14.1 percent more in wages than nonunion workers in the same occupations and with the same level of experience and education. The "union premium" is considerably higher when total compensation is included, because unionized workers are much more likely to get health insurance and pension benefits.

Unions not only raise wages; they also reduce workplace inequalities based on race. The union wage premium is especially high for black employees (18.3 percent), Hispanic employees (21.9 percent), and Asian employees (17.4 percent). (The union wage premium is 12.4 percent for white employees.) In other words, unions help to close racial wage gaps by making it tougher for employers to discriminate.

Likewise, unions reduce workplace inequalities based on gender. The union wage premium is 14.5 percent for black women, 18.7 percent for Hispanic women, 12.6 percent for Asian women, and 9.1 percent for white women. Unions also reduce overall wage inequalities, because they raise wages more at the bottom and middle than at the top.

If unions are good for workers and good for the economy, why are so few employees union members? Some business leaders argue that American employees are simply anti-union, a consequence of our culture's strong individualistic ethic and opposition to unions as uninvited "third parties" between employers and their employees. Anti-union attitudes, business groups claim, account for the decline in union membership, which peaked at 35 percent in the 1950s and is now 12.3 percent.

But this story leaves out four decades of corporate union-bashing that has increased the risk that workers take when they seek union representation. In general, polls reveal that American workers have positive attitudes toward unions, and these positive views are increasing as anxiety about job security, wages, and pensions grows.

A majority of American employees say they would join a union if they could. But they won't vote for a union, much less participate openly in a union-organizing drive, if they fear they will lose their job or be otherwise punished or harassed at work for doing so.

And there's the rub. Americans have far fewer rights at work than employees in other democratic societies. Current federal laws are an impediment to union organizing rather than a protector of workers' rights. The rules are stacked against workers, making it extremely difficult for even the most talented organizers to win union elections. Under current National Labor Relations Board regulations, any employer with a clever attorney can stall union elections, giving management time to scare the living daylights out of potential recruits.

According to Cornell University's Kate Bronfenbrenner, it is standard practice for corporations to subject workers to threats, interrogation, harassment, surveillance, and retaliation for union activity during organizing campaigns. One-third of all employers illegally fire at least one employee. Some workers get reinstated, but it often takes years and exhaustive court battles. Penalties for these violations are so minimal that most employers treat them as a minor cost of doing business. Employees who initially signed union cards are often long gone or too afraid to vote by the time the NLRB conducts an election. Large employers spend hundreds of millions of dollars a year to hire anti-union consultants in order to intimidate workers from participating in or showing support for union campaigns. Employers can require workers to attend meetings on work time, during which company managers give anti-union speeches, show anti-union films, and distribute anti-union literature.

Unions have no equivalent rights of access to employees. To reach them, organizers must distribute leaflets outside offices, hospitals, and factory gates (an activity unions have not found cost-effective), visit workers' homes, or hold secret meetings.

Even with passage of the Employee Free Choice Act, employees would still need to mount campaigns to persuade other workers to join a union and then win a decent contract. But EFCA would provide greater balance between employees and employers in the workplace. This would make it more likely that union organizing campaigns would succeed, that workers would have better-paying jobs, that the ripple effects of union pay would improve the overall economy, and that the political influence of the labor movement would help the nation enact more progressive policies to make America a more humane society.

Even before EFCA is enacted, there is plenty that the executive branch of government could do to promote good jobs and the right of workers to bargain collectively. That, in turn, would increase the ranks of those battling for other policies to help working Americans. What are our friends in the White House waiting for?

The difficulties workers face in forming and maintaining effective unions are truly chilling. Here again, we see how the super-wealthy have used their political dominance to rig the game in their favor. Hard-won protections for workers have been steadily eroded ever since the election of Reagan. In a true free-market, workers could combine for greater strength, just as investors do to capture market-share. Yet today, high-priced legal firms find it all too easy to prevent union formation, and even to undermine existing unions. As unions decline, there is no one left to defend basic labor rights like the 40 hour week, or minimum wage. The huge challenge facing labor today is how to move into the new "factories" of the service economy: big-box retailers, hospitals, nursing homes, medical billing centers. As more lawyers and software engineers find their jobs outsourced, there may be an opportunity to create some new white-collar unions as well. One thing's for sure, if the Republicans make big gains this November all of America's workers will suffer.

Monday, September 6, 2010

Today Barack Obama made good use of his labor day appearance in Milwaukee to rally the Democrats, who have been hungry for a sign of fighting spirit from the President. The infrastructure spending he announced is a step in the direction of creating jobs, although it is not the sort of massive new stimulus some had hoped for. The most powerful part of the speech came in its critique of Republican obstructionism, and the Bush legacy of aggressive upward redistribution of wealth combined with weakening of social services. Here's the Milwaukee speech's conclusion:

But there are some folks in Washington who see things differently. When it comes to just about everything we've done to strengthen the middle class and rebuild our economy, almost every Republican in Congress said no. Even where we usually agree, they say no. They think it's better to score political points before an election than actually solve problems. So they said no to help for small businesses. No to middle-class tax cuts. No to unemployment insurance. No to clean energy jobs. No to making college affordable. No to reforming Wall Street. Even as we speak, these guys are saying no to cutting more taxes for small business owners. I mean, come on! Remember when our campaign slogan was "Yes We Can?" These guys are running on "No, We Can't," and proud of it. Really inspiring, huh?

To steal a line from our old friend, Ted Kennedy: what is it about working men and women that they find so offensive?

When we passed a bill earlier this summer to help states save the jobs of hundreds of thousands of teachers, nurses, police officers and firefighters that were about to be laid off, they said "no" to that, too. In fact, the Republican who's already planning to take over as Speaker of the House dismissed them as "government jobs" that weren't worth saving. Not worth saving? These are the people who teach our kids. Who keep our streets safe. Who put their lives on the line for our own. I don't know about you, but I think those jobs are worth saving.

We made sure that bill wouldn't add to the deficit, either. We paid for it by finally closing a ridiculous tax loophole that actually rewarded corporations for shipping jobs and profits overseas. It let them write off the taxes they pay foreign governments - even when they don't pay taxes here. How do you like that - middle class families footing tax breaks for corporations that create jobs somewhere else! Even a lot of America's biggest corporations agreed the loophole should be closed, that it wasn't fair - but the man with the plan to be Speaker is already aiming to open it up again.

Bottom line is, these guys refuse to give up on the economic philosophy they peddled for most of the last decade. You know that philosophy: you cut taxes for millionaires and billionaires; you cut rules for special interests; you cut working folks like you loose to fend for yourselves. They called it the ownership society. What it really boiled down to was: if you couldn't find a job, or afford college, or got dropped by your insurance company - you're on your own.

Well, that philosophy didn't work out so well for working folks. It didn't work out so well for our country. All it did was rack up record deficits and result in the worst economic crisis since the Great Depression.

I'm not bringing this up to re-litigate the past; I'm bringing it up because I don't want to re-live the past. It would be one thing if Republicans in Washington had new ideas or policies to offer; if they said, you know, we've learned from our mistakes. We'll do things differently this time. But that's not what they're doing. When the leader of their campaign committee was asked on national television what Republicans would do if they took over Congress, he actually said they'd follow "the exact same agenda" as they did before I took office. The exact same agenda.

So basically, they're betting that between now and November, you'll come down with a case of amnesia. They think you'll forget what their agenda did to this country. They think you'll just believe that they've changed. These are the folks whose policies helped devastate our middle class and drive our economy into a ditch. And now they're asking you for the keys back.

Do you want to give them the keys back? Me neither. And do you know why? Because they don't know how to drive! At a time when we're just getting out of the ditch, they'd pop it in reverse, let the special interests ride shotgun, and hit the gas, careening right back into that ditch.

Well, I refuse to go backwards, Milwaukee. And that's the choice America faces this fall. Do we go back to the policies of the past? Or do we move forward? I say we move forward. America always moves forward. And we are going to keep moving forward today.

Let me just close by saying this. I know these are difficult times. I know folks are worried, and there's still a lot of hurt out here. I hear about it when I spend time in towns like this; I read about it in your letters at night. And when times are tough, it can be easy to give in to cynicism and fear; doubt and division - to set our sights lower and settle for something less.

But that is not who we are. That is not the country I know. We do not give up. We do not quit. We are a people that faced down war and depression; great challenges and great threats; and lit the way for the rest of the world. Whenever times have seemed at their worst, Americans have been at their best. Because it is in those times when we roll up our sleeves and remember that we will rise or fall together - as one nation, and one people. That's the spirit that started the labor movement. The idea that alone, we are weak. Divided, we fall. But united, we are strong. That's why we call them unions. That's why we call this the United States of America.

Milwaukee, that's the case I am going to make across the country this fall - yours. And I am asking for your help. If you are willing to join me, and Tom Barrett, and Gwen Moore, and Russ Feingold, we can strengthen our middle class and make our economy work for working Americans again. We can restore the American Dream and deliver it safely to our children. That's how we built the last American century. That's how we'll build the next. We don't believe in the words "No, we can't." We are Americans, and in times of great challenge, we push forward with an unyielding faith that we can. Yes, we can. Thank you, God Bless You and the work you do, and God Bless the United States of America.

Sunday, September 5, 2010

The essence of populism is, as Mattson writes, “the people, yes” — the idea that ordinary Americans have as much (or even more) to contribute to our political, economic and social evolution as do technocratic elites. Frankly, as someone who has seen first hand the deep condescension of many Washington-based progressive advocacy organizations toward “the field”, I think a movement-wide emphasis on populism is a welcome counterweight. The “don’t worry, we’re the experts in DC, we’ll handle the big questions” attitude toward the progressive movement outside Washington is as frustrating to grassroots liberal activists as the same sentiment coming from politicians in Washington irritates voters. Moreover, while conservatives certainly don’t want to help anyone — especially not poor people of color — the pity-filled do-gooder Sally Struthers-eque “thank goodness you have us to help you” attitude exuded by many white liberal activists (most often implied but often explicit) is downright offensive. Why is there no mass grassroots progressive movement rising up on the left like the Tea Party? Our not-so-hidden bias against average people is a big part of the answer. It’s in our attitudes, but it’s also reflected in the way we structure the progressive “movement” such as it is — focusing on Washington, DC think tanks and lobbying arms and spending barely little money and attention on real grassroots organizing.

There's another big problem beyond the liberal failure to work hard enough, and empathetically enough, with the grassroots. The right, which openly promotes the interests of the wealthiest and most powerful, have succeeded in portraying articulate liberals as "elitist." The only way to combat this is to relentlessly point out how the greatest beneficiaries of Republican action are in fact billionaires. Liberal leaders need to lose their shyness about attacking the greed and selfishness of outsourcing, downsizing CEOs and their bought and paid for Republican lapdogs. Even thoughtful people like Robert Reich and Paul Krugman seem overly polite to the big plutocrats they point out hog most of our wealth. While the fact that a CEO earns 500 times the wage of an average worker at the same company does piss people off, a more personal anecdote can be even more powerful. Pet psychiatrists, Lear jets, enormous yachts, obscene excess at every turn! And you're worried these people might have to go back to paying the same, fairly low, taxes they paid under Clinton? Populism doesn't have to be demagoguery. We don't need to provoke fear and hatred, we just need to calmly remind folks of where their interest truly lies.

Friday, September 3, 2010

The assertion that a modest increase in marginal tax rates for the wealthiest Americans would devastate business activity was repeated by Kevin Hasset and Alan Viard in the Wall Street Journal:

It's clear that business income for large and small firms will be hit by the higher tax rates. And in point of fact, firms of all sizes contribute to the nation's prosperity. So it's a mistake to focus only on the impact of increased tax rates on small business. But will the higher rates actually cause a significant reduction in business activity?

Economic research supports a large impact. A pair of papers by economists Robert Carroll, Douglas Holtz-Eakin, Harvey Rosen and Mark Rider that were published in 1998 and 2000 by the National Bureau of Economic Research analyzed tax return data and uncovered high responsiveness of sole proprietors' business activity to tax rates. Their estimates imply that increasing the top rate to 40.8% from 35% (an official rate of 39.6% plus another 1.2 percentage points from the restoration of a stealth provision that phases out deductions), as in Mr. Obama's plan, would reduce gross receipts by more than 7% for sole proprietors subject to the higher rate.

These results imply a similar effect on proprietors' investment expenditures. A paper published by R. Glenn Hubbard of Columbia University and William M. Gentry of Williams College in the American Economic Review in 2000 also found that increasing progressivity of the tax code discourages entrepreneurs from starting new businesses.

What's interesting about this so-called research is it isn't based on any real data. The first study made theoretical projections based on questionable assumptions about economic behavior. It was published at a time of robust job creation (late Clinton) followed by tax cuts that were accompanied by less robust job creation (Bush). The second study over-interprets the natural tendency of wealthy people to tell survey-takers they'd rather pay lower taxes. An intelligent wealthy person would not decline the opportunity to expand into a new profit-making enterprise, merely because the tax-rate on new profits would be slightly higher.

Of course economists like Paul Krugman have demolished these fallacies. Yet they keep popping up like praire dogs out of the hole.

Wednesday, September 1, 2010

Most of us confront a reality where we feel that we can do little to influence the behavior of corporate behemoths. Nonetheless, occasionally decent people can score small victories. Here is the story of how workers in Honduras, students in the U.S., and administrators at Cornell University and the University of Wisconsin, were able to pressure Nike into taking a little responsibility:

A pillar of the brands' efforts to elude accountability is their long-standing insistence that their self-imposed codes of conduct, which require them to ensure that their suppliers obey the law, somehow absolve them of financial responsibility when they instead allow suppliers to rob workers of legally-owed compensation. The prime example of this self-contradictory posture and its consequences is the widespread failure of contract factories to pay statutory severance benefits and the consistent failure of the brands to do anything about it.

The laws in most apparel exporting countries mandate severance payments to workers in the case of factory closures. Because low wages make saving impossible, and because social safety nets are weak, this severance is often the only thing standing between laid off workers and outright destitution. Yet it is a routine occurrence for factories to shut down without paying severance. National governments generally do little or nothing in response. Although precise data is unavailable, anecdotal evidence suggests that the scale of this theft is massive, involving millions of workers over the decade and a half since codes of conduct were first adopted. To cite just one example: a survey of the operations of a single high-profile brand, in one Southeast Asian country, identified more than $40 million illegally withheld from workers in a three year period.

The apparel brands have been united in their refusal to accept any financial liability in such circumstances and, until last month, none had ever broken ranks. That changed when Nike agreed to pay $1.54 million in cash (and nearly a half million dollars in kind) to the employees of two Honduran contract factories.

A Radically Different Outcome

The garment factories closed last year and failed to pay more than $2 million in legally mandated severance. The Honduran government took very limited action, overseeing a process of liquidation of machinery and goods left at the factories which generated barely 20% of the money owed. Following the industry script, Nike lamented the workers' mistreatment, while insisting that it had no obligation to pay a penny to fix the problem.

On its website, Nike insisted that it was "absolutely concerned for the workers in Honduras and...deeply disappointed that the two failed sub-contract factories did not pay the workers their full severance pay. However," the company explained, "it remains [our] position that factories which directly employ workers are responsible for ensuring that their employees receive their correct entitlements and as such Nike will not be paying severance to [these] workers."

The story would normally have ended there, but several dynamics combined to produce a radically different outcome:

First, the workers demonstrated extraordinary perseverance; they refused to go quietly to their fate and instead organized, protested and kept the issue alive in Honduras for well over a year after the factories closed (see photo, right).

Second, Nike's own voluntary code is not the only labor code that applied in this case; Nike is also bound by the labor codes of universities across the country that license their logos to Nike and other apparel brands (who then make clothes bearing the universities' names and insignias). Unlike self-imposed corporate codes, the universities' codes are contractually binding on the brands. And, also unlike corporate codes, compliance is monitored by an entity, the Worker Rights Consortium (WRC), which accepts no funding from the industry. The WRC exposed the violations in Honduras and reported them, with extensive documentation, to Nike's university partners.

Third, student activists, led by United Students Against Sweatshops, dedicated themselves to holding Nike accountable. The students refused to accept Nike's position that it had no financial responsibility. They organized on campus to urge aggressive university action and used a range of creative tactics to pressure Nike directly.

Finally, universities are increasingly prepared to take strong enforcement measures when warranted - a reality that was illustrated last year when nearly 100 universities terminated the licensing rights of Russell Athletic, a subsidiary of Fruit of the Loom and Berkshire Hathaway, over labor rights violations at one of Russell's overseas factories. Russell responded, to its credit, by adopting sweeping reforms. When two of Nike's university partners - the University of Wisconsin and Cornell University- announced the termination of the brand's licenses this spring, Nike had to consider the prospect of a similar snowball effect.

A Groundbreaking Agreement

At the end of June, Nike entered into negotiations with worker representatives. These discussions produced the groundbreaking agreement signed on July 21. The accord marks the first time a major apparel brand has effectively assumed financial responsibility for labor rights violations committed by its contractors. (NB: Under the accord, Nike is not officially paying severance but contributing to a "Worker Relief Fund.")

Nike has set an example that other apparel brands will feel pressure to follow. As that pressure builds, brands will no longer be able to assume that they can easily evade financial responsibility for their contractors' misdeeds. Brands may thus begin to see the advantages of ensuring that their suppliers fulfill their financial obligations - providing the brands with an incentive both to police suppliers' behavior more aggressively and to ensure that the prices they pay suppliers are adequate to make compliance feasible. Weighed against the prospect of getting socked with millions of dollars in arrears, the short-term savings generated by underpaying for goods may no longer look like such a smart play.

For these reasons, last month's breakthrough may prove to be a watershed moment in the battle to impose the rule of law on the "wild west" environment of global manufacturing supply chains.

Of course the grim reality of worldwide labor exploitation hasn't changed much. Yet it is heartening to see even a small victory accomplished through the good efforts of so many people. We must always be mindful of the need to elect people who respect human rights and the law. But, beyond voting, we can also exert some influence as consumers willing to take away our business from companies who refuse to do the right thing.